SNC-Lavalin announces solid earnings in Q1 2017, with a net income attributable to SNC-Lavalin shareholders of $90 million

by pmnationtalk on May 4, 201760 Views

snc_lavalin_logo

May 4, 2017

  • Reported Q1 2017 IFRS net income attributable to SNC-Lavalin shareholders of $89.7 million, or $0.60 per diluted share.
  • Q1 2017 G&A expenses of $107.8 million, 12.1% lower versus Q1 2016.
  • Q1 2017 adjusted net income from E&C(1) of $60.7 million, or $0.40 per diluted share.
  • 2017 Outlook maintained: adjusted diluted EPS from E&C(2) in the range of $1.70 to $2.00.

SNC-Lavalin Group Inc. (TSX: SNC) announces its results today for the first quarter ended March 31, 2017.

“We are pleased with our first quarter performance, all four segments and the Capital group performing slightly ahead of our expectations, and we are on track to meet our 2017 outlook,” said Neil Bruce, President and Chief Executive Officer, SNC-Lavalin Group Inc. “We are also very pleased with the recently announced proposed acquisition of WS Atkins, as we continue to execute on our growth strategy. This announcement reflects our progress towards our goal to position SNC-Lavalin to benefit from the expected future growth that is ahead, particularly in Infrastructure and Nuclear sectors.”  

  • Q1 2017 reported IFRS net income attributable to SNC-Lavalin shareholders was $89.7 million, or $0.60 per diluted share, compared with $122.1 million, or $0.81 per diluted share, for the corresponding period in 2016. Q1 2016 Reported IFRS net income attributable to SNC-Lavalin shareholders included a net gain after taxes of $51.1 million, or $0.34 per diluted share, on Capital investments disposals.
  • Selling, general and administrative (SG&A) expenses in Q1 2017 were $157.1 million compared with $168.1 million, in Q1 2016. General and administrative (G&A) expenses decreased by 12.1% to $107.8 million, while selling expenses increased to $49.3 million compared to $45.4 million in Q1 2016. This increase was mainly due to higher business development activities than in Q1 2016, particularly in the Infrastructure sector.
  • Adjusted net income from E&C(1) for Q1 2017 increased to $60.7 million, or $0.40 per diluted share, compared to $57.2 million, or $0.38 per diluted share for Q1 2016, mainly due to higher gross margin-to-revenue ratio and lower G&A, partially offset by higher financial expenses and income taxes. On a segmented basis, the higher segment EBIT(5) in Q1 2017, compared to Q1 2016, was mainly due to Oil & Gas and Power.
  • Adjusted net income from Capital(3) for Q1 2017 was $44.4 million, or $0.30 per diluted share, compared with $39.9 million, or $0.26 per diluted share for the corresponding period in 2016, mainly due to a higher level of activity of Capital investments and an increase in dividends from Highway 407 ETR.
  • Total E&C revenue for the first quarter ended March 31, 2017 was $1.8 billion, compared with $1.9 billion in the first quarter of 2016. The variation was due to a decrease in the Infrastructure segment, principally attributable to the disposal, in December 2016, of SNC-Lavalin’s non-core E&C business in France and Real Estate Facilities Management business in Canada.
  • The revenue backlog(7) totaled $10.1 billion at the end of March 2017, with the Mining & Metallurgy segment increasing by more than 50% since December 31, 2016. Total new contract awards for the first quarter amounted to $1.2 billion.
  • The balance sheet remained strong at the end of March 2017 with cash and cash equivalents of $0.8 billion.

Outlook

The Company is maintaining its previously announced 2017 outlook for the adjusted diluted EPS from E&C(2), which is expected to be in the range of $1.70 to $2.00, without taking into account the recently proposed acquisition of WS Atkins or related financing.

While we anticipate continuing market challenges in 2017 in certain of the Company’s sectors, we expect to benefit from our recent restructuring savings and “Operational Excellence” program. As such, we expect increased Segment EBIT(5) margins for all segments in 2017, compared to 2016, except for Mining & Metallurgy.

This outlook is based on the assumptions and methodology described in the Company’s 2016 Management’s Discussion and Analysis under the heading, “How We Budget and Forecast Our Results”, which should be read in conjunction with the “Forward-Looking Statements” section below and is subject to the risks and uncertainties summarized therein, which are more fully described in the Company’s public disclosure documents.

Quarterly Dividend

The Board of Directors today declared a cash dividend of $0.273 per share, payable on June 1, 2017, to shareholders of record on May 18, 2017. This dividend is an “eligible dividend” for income tax purposes.

Q1 2017 Results Conference Call / Webcast

SNC-Lavalin will hold a conference call today at 1:30 p.m. EDT (Eastern Daylight Time) to review results for its first quarter. To join the conference call, please dial toll free at 1 800 263 0877 in North America, 647 794 1827 in Toronto, 438 968 3557 in Montreal, 080 0279 7204 in the United Kingdom, or 180 093 6686 in Ireland. A live audio webcast of the conference call and an accompanying slide presentation will be available at investors.snclavalin.com. A recording of the conference call will be available on our website within 24 hours following the call.

Annual Shareholders’ Meeting / Webcast

SNC-Lavalin will also hold its Annual Shareholders’ Meeting today at 11:00 a.m. EDT at the Palais des congrès, 1001 Place Jean-Paul-Riopelle, Montreal, Quebec. The event will be webcast live, and will be available at http://www.icastpro.ca/esnc170504.

About SNC-Lavalin

Founded in 1911, SNC-Lavalin is one of the leading engineering and construction groups in the world and a major player in the ownership of infrastructure. From offices in over 50 countries, SNC-Lavalin’s employees are proud to build what matters. Our teams provide engineering, procurement, construction, completions and commissioning services together with a range of sustaining capital services to clients in four industry sectors: oil and gas, mining and metallurgy, infrastructure and power. SNC-Lavalin can also combine these services with its financing and operations and maintenance capabilities to provide complete end-to-end project solutions.  www.snclavalin.com
(1) Adjusted net income from E&C is defined as net income attributable to SNC-Lavalin shareholders from E&C, excluding charges related to restructuring, right-sizing and other, acquisition-related costs and integration costs, as well as amortization of intangible assets incurred in connection with the acquisition of Kentz in 2014 and the gain (loss) on disposals of E&C businesses. E&C is defined in the Company’s 2016 financial statements and Management’s Discussion and Analysis. The term “Adjusted net income from E&C” does not have any standardized meaning under IFRS. Therefore, it may not be comparable to similar measures presented by other issuers. Management uses this measure as a more meaningful way to compare the Company’s financial performance from period to period. Management believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company’s performance. See reconciliation below.

(2) Adjusted diluted EPS from E&C is defined as the adjusted net income from E&C divided by the diluted weighted average number of outstanding shares for the period.

(3) Adjusted net income from Capital is defined as net income attributable to SNC-Lavalin shareholders from Capital, excluding the gain on disposals of Capital Investments.

(4) Adjusted diluted EPS from Capital is defined as the adjusted net income from Capital divided by the diluted weighted average number of outstanding shares for the period.

(5) Segment EBIT is defined herein as gross margin less i) directly related selling, general and administrative expenses; ii) corporate selling, general and administrative expenses that are directly related to projects or segments; and iii) non-controlling interests before taxes. Corporate selling, general and administrative expenses that are not directly related to projects or segments, restructuring costs, goodwill impairment, acquisition-related costs and integration costs and amortization of intangible assets related to the Kentz acquisition, as well as gains (losses) on disposals of E&C businesses and Capital investments are not allocated to the Company’s segments. The term “Segment EBIT” does not have any standardized meaning under IFRS. Therefore, it may not be comparable to similar measures presented by other issuers. Management uses this measure as a more meaningful way to compare the Company’s financial performance from period to period. Management believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company’s performance.

(6) Adjusted E&C EBITDA is defined herein as earnings from E&C before net financial expenses (income), income taxes, depreciation and amortization, and excludes charges related to restructuring, right-sizing and other, acquisition-related costs and integration costs, as well as the gains (losses) on disposals of E&C businesses and Capital investments. The term “Adjusted E&C EBITDA” does not have any standardized meaning under IFRS. Therefore, it may not be comparable to similar measures presented by other issuers. Management uses this measure as a more meaningful way to compare the Company’s financial performance from period to period. Management believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company’s performance.

(7) Revenue Backlog is defined herein as a forward-looking indicator of anticipated revenues to be recognized by the Company, determined based on contract awards that are considered firm. Management could be required to make estimates regarding the revenue to be generated for long-term firm reimbursable contracts. In order to provide information that is comparable to the revenue backlog of other categories of activity, the Company limits the O&M activities revenue backlog, which can cover a period of up to 40 years, to the earlier of: i) the contract term awarded; and ii) the next five years. The term “Revenue backlog” does not have any standardized meaning under IFRS. Therefore, it may not be comparable to similar measures presented by other issuers. Management believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company’s future performance.

SNC-Lavalin Financial Summary

(in thousands of Canadian dollars, unless otherwise indicated) First Quarter
2017 2016
Revenues
From E&C 1,788,324 1,930,773
From Capital 60,946 57,397
1,849,270 1,988,170
Net income attributable to SNC-Lavalin’s shareholders
From E&C 45,338 31,199
From Capital 44,376 90,908
  89,714 122,107
   
Diluted EPS ($)
From E&C 0.30 0.21
From Capital 0.30 0.60
  0.60 0.81
     
   
Adjusted net income attributable to SNC-Lavalin’s shareholders
From E&C(1) 60,724 57,180
From Capital(3) 44,376 39,860
  105,100 97,040
Adjusted diluted EPS ($)
From E&C(2) 0.40 0.38
From Capital(4) 0.30 0.26
  0.70 0.64
Adjusted E&C EBITDA(6) 99,991 99,850
Adjusted E&C EBITDA margin 5.6% 5.2%
Revenue backlog(7) 10,078,700 13,417,300
Cash and cash equivalents 810,533 1,388,390

Reconciliation of IFRS Net Income as Reported to Adjusted Net Income

Net income, as reported Net charges related to the restructuring & right-sizing plan and other Acquisition Net gain on capital investment and E&C business disposals Net income, adjusted
Acquisition-related costs and integration costs Amortization of intangible assets related to Kentz

First Quarter 2017

 In M$

E&C 45.3 2.6 1.1 12.3 (0.6) 60.7
Capital 44.4 44.4
89.7 2.6 1.1 12.3 (0.6) 105.1
Per Diluted share ($)
E&C 0.30 0.02 0.01 0.08 (0.0) 0.40
Capital 0.30 0.30
0.60 0.02 0.01 0.08 (0.0) 0.70

First Quarter 2016

 In M$

E&C 31.2 9.2 1.0 15.8 57.2
Capital 90.9 (51.1) 39.8
122.1 9.2 1.0 15.8 (51.1) 97.0
Per diluted share ($)
E&C 0.21 0.06 0.01 0.10 0.38
Capital 0.60 (0.34) 0.26
0.81 0.06 0.01 0.10 (0.34) 0.64

-30-

Send To Friend Email Print Story

Comments are closed.

NationTalk Partners & Sponsors Learn More